One New Technology and Symmetric Firms

Abstract

This chapter considers a framework with two identical firms which both have the possibility to make an investment that increases their payoff. By how much this payoff is raised is not known beforehand, since the future market conditions for the firm’s products are uncertain. Both firms operate on the same output market which implies that the investment decision of one firm affects the payoff of the other firm. By analyzing this model uncertainty is combined with strategic aspects.